Relative Or Not, Poverty Matters

According to Tony Abbott and the book of Matthew, "the poor will always be with us". It certainly seems that way in the wake of the Australian Council of Social Service report on poverty in Australia, which has again highlighted the scale of need (pdf) in some sections of the Australian community.

Australia is a rich country. On most measures, we rank in the very top handful of nations in the world in terms of wealth per person. The figure for the average weekly earnings for a full-time Australian worker working a normal 38-hour week was $1352.70 this year, according to the Australian Bureau of Statistics. While this is admittedly flawed figure — representing the mean, not the median, and therefore skewed by the earnings of the very wealthy — it’s a good indication of just how comfortable an "average" wage earner is in Australia in 2012.

But if we move down the scale and look at people earning substantially less than this figure, real pockets of deprivation begin to emerge. The ACOSS report uses as its measure of poverty the figure of 50 per cent of median earnings. The cut off for a couple with two children in 2009-10 was $752 a week — not exactly a fortune, in anyone’s language.

The debate about poverty is unfortunately bedeviled by commentators questioning the relative nature of the measure, as Bernard Keane did yesterday. "There will always be a substantial proportion of the population identified as ‘living in poverty’ if you define poverty in relation to median income," Keane wrote.

Keane then went on to cite an important recent paper by respected social researcher Peter Saunders on material deprivation in Australia — a paper that found similar levels of need to this week’s ACOSS report. Saunders and his co-author Melissa Wong found that 15 per cent of all Australian households suffer from what the researchers call "multiple deprivation" — that is, they lacked three or more of the 24 goods or services that a survey identified most people considered "essential".

Another report that came out this week confirmed this. Anglicare’s "State of the Family" report for 2012 surveyed people accessing emergency relief services across the Anglicare Australia network. Unsurprisingly, many of these families were doing it tough. The Anglicare survey found:

65 per cent of households with children said they regularly could not provide enough variety of food for their children, 38 per cent said their children were regularly not eating enough and 29 per cent of cases they said children were regularly going hungry.

In 7 per cent of households children did not eat for a whole day either weekly or some weeks.

This is not some abstract measure of relative poverty. This is a report telling us that kids are going hungry.

The argument about relative poverty is a distraction,. Most aspects of economic life are relative. It may be that a poor Australian today earns more than a wealthy Somalian, and more than a rich Australian 50 years ago. But that’s irrelevant, because poor people have to live and work in the here and now. And that means the essential goods and services they need are, by definition, priced in today’s dollars.

Housing is the best example. Australia has an undeniable crisis in affordable housing, and that crisis hits the poorest disproportionately. In her media release accompanying the poverty report, ACOSS director Cassandra Goldie argued that "to tackle poverty we also need urgent action to ease housing cost pressures, particularly for low income people who are renting privately".

"People on social security and those in very low paid work receive Rent Assistance to help with housing costs, but at a maximum of $70 a week this is less than a third of typical rents for flats in capital cities and mining towns," Goldie pointed out.

According to the Bureau of Statistics’ excellent "Life on Struggle Street" publication this year, Australians with low incomes were spending on average about the same amount per week on their housing as the broader population (around about $130 a week in 2009-10).

But this figure ate up more than a quarter of their weekly earnings, compared to only 16 per cent for households at large. Poor households spent 57 per cent of their income on housing, food and transport. If you’re spending more than half your income just to eat, sleep and travel to work, there’s precious little ability to save for the future, or meet unexpected disasters. For the poorest, paying to fix a broken refrigerator or for a new set of school uniforms can be beyond their reach. As a result, the ABS report found that "around a quarter (24 per cent) of low economic resource households reported spending more money than they received most weeks, twice the rate of other households (12 per cent)."

Poverty is a complex social problem that cannot easily be addressed, even in a rich country like Australia. But some policy measures are no-brainers. Kicking single mums off welfare, for instance. The government’s changes to parenting allowance for sole parents will mean approximately 100,000 sole parents will be transferred off their current benefit and onto the much lower Newstart allowance. The government will save around $685 million, but at the likely cost of further increases in children living in poverty.

The level of Newstart payments is already a national disgrace. Newstart is indexed at a lower rate than pensions, for instance, which means that those looking for work are punished in comparison to those who receive a pension — and keep getting punished, as the cost of living inevitably rises over time. There is no good justification for the disastrously low level of Newstart, which is now so low it essentially guarantees that a person receiving it will soon slip into poverty. The rate of Newstart hasn’t been increased in real terms since 1995. In that time, household essentials like rents and energy have increased at well above the broader rate of inflation.

Raising the rate of Newstart is actually pretty cheap, even for a government desperate to deliver a budget surplus. ACOSS has estimated it would cost around $600 million a year — small change in a federal budget well in excess of $300 billion. But to do that requires a government to prioritise poverty and disadvantage. Labor has done some good things on this front in office: most notably, by permanently raising the rate of the pension, and by managing the economy through the worst of the global financial crisis.

But at the moment, poverty simply isn’t as important for Labor. Demonstrating its economic credentials by paying homage to our national obsession with balanced government budgets is what counts. The cost of that obsession is the hunger of children.